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Can the Government Take My Third Stimulus Check for Back Child Support?

Can the Government Take My Third Stimulus Check for Back Child Support?In early March, the third round of stimulus checks went out to the American people. For many, the money has already been delivered to their accounts. Others have lots of questions, as every round of stimulus checks has had different rules. Can my check be garnished for late child support? What about overdue college loans? Outstanding debts? Will this money be taxed?

Today, Holland Law provides answers to some of your questions about the third round of stimulus checks as they relate to your family law matters.

How does this stimulus payment differ from the first two?

The base amount for the third stimulus payment is  $1,400. Families also receive an additional $1,400  per eligible dependent. These payments are also targeted more toward families who are more likely to be suffering financially, with payments phasing out once an individual’s or head of household’s adjusted gross income (AGI) exceeds $80,000 to $160,000 annually, depending on their filing status.

While the first stimulus payment allowed garnishment only for back child support, the second payment had protections from garnishment completely. This third stimulus payment cannot be seized or garnished for back child support, but it can be taken to satisfy private debts.

When can the government garnish my stimulus check?

Although the IRS cannot take your stimulus money for unpaid child support or student loans, they can withhold money issued as a Recovery Rebate Credit, which CNET explains here. Additionally, the NY Times reported in December that some banks are using direct deposit stimulus funds to pay off customer overdraft fees, draining their accounts before they can even use the money.

Only state or government agencies have the right to access a refund to pay a debt. However, according to CNET, “this changes once you deposit your refund in your bank account, when private creditors may have access to those funds, depending on your state.” Private creditors may be able to access these accounts with a court order.

Why are these payments not protected from garnishment?

Congress used a process called “budget reconciliation” to pass the stimulus bill, which is a different method used from the first two bills. This method only allows certain types of legislation to pass through Congress and, consequently, private debt collectors have the right to garnish any stimulus money that ends up in your bank account.

Advocacy groups expressed their dissent with this in an open letter to Congress that read in part:

We believe it is imperative that Congress ensure that these next stimulus payments are treated as “benefits” subject to the federal exemption from garnishment. Otherwise, the families that most need this money—those struggling with debt and whose entire bank accounts may be frozen by garnishment orders—will be not be able to access their funds.

If you are still waiting for your third stimulus payment, you can track it using the IRS Get My Payment tool. Feel free to contact our offices if you have any other questions.

Attorney Tom Holland can help if you are behind on your child support, or if your co-parent is in arrears on their payments. We want to come to resolution in the easiest and smoothest way possible. To schedule a consultation in either our Fort Mill office on Gold Hill Road, or in our Rock Hill office on Oakland Avenue, please call 803-219-2630 or contact us online. Our team serves clients in the York, Lancaster, and Chester County communities.